Department of Labor: 22-07-006-04-432

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EMPLOYMENT STANDARDSADMINISTRATION

DISTRICT OF COLUMBIA WORKMENSCOMPENSATION ACT SPECIAL FUNDFINANCIAL STATEMENTS ANDINDEPENDENT AUDITORSREPORT

September 30, 2006 and 2005

Date Issued: May 7, 2007Report Number: 22-07-006-04-432

OfficeofIns

pectorGeneralOfficeofA

udit

This report was prepared by KPMG, LLP, under contract to the U.S.Department of Labor, Office of Inspector General, and by acceptance, itbecomes a report of the Office of Inspector General.

__________________________Assistant Inspector General for Audi


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District of Columbia Workmens Compensation Act Special FundFinancial Statements and Independent Auditors Report

i U.S. Department of LaborOffice of Inspector General

Report Number: 22-07-006-04-432

DISTRICT OF COLUMBIA WORKMENSCOMPENSATION ACT SPECIAL FUND

Table of Contents

Page

ACRONYMS ii

MANAGEMENTS DISCUSSION AND ANALYSIS

Mission and Organizational Structure 1

Financial Highlights 2

Performance Goals and Results 2

Internal Controls and Systems 3

Known Risks and Uncertainties 3

Limitations of the Financial Statements 4

INDEPENDENT AUDITORS REPORT 5

FINANCIAL STATEMENTS

Balance Sheets 11Statements of Net Cost 12

Statements of Changes in Net Position 13

Statements of Budgetary Resources 14

Statements of Financing 15

NOTES TO THE FINANCIAL STATEMENTS

Note 1 Summary of Significant Accounting Policies 17

Note 2 Funds with U.S. Treasury 19

Note 3 Investments 20

Note 4 Accounts Receivable, Net 21

Note 5 Other Liabilities 22

Note 6 Statement of Budgetary Resources 23


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U.S. Department of LaborOffice of Inspector General iiReport Number: 22-07-006-04-432


Acronyms

DCCA District of Columbia Workmens Compensation Act Special FundDLHWC Division of Longshore and Harbor Workers CompensationDOL Department of LaborESA Employment Standards AdministrationFY Fiscal YearLHWCA Longshore Harbor Workers Compensation Act

OMB Office of Management and BudgetOWCP Office of Workers Compensation ProgramsU.S.C. United States Code


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Managements Discussion and Analysis


1 U.S. Department of LaborOffice of Inspector General

Report Number: 22-07-006-04-432

Mission and Organizational Structure

Two Special Funds are administered by the Office of Workers Compensation Program(OWCP) under section 44 of the Longshore Harbor Workers Compensation Act(LHWCA); the Longshore Act Special Fund created under the original Act in 1927 andthe Special Fund under the District of Columbia Workmens Compensation Act of 1928(DCCA). These Funds were established for the primary purpose of equitably distributingamong all employers the liabilities associated with second injury claims (a second injuryis an injury to a worker which, in combination with an existing permanent partialimpairment, results in the workers increased permanent disability or death).

Organizationally the DCCA Fund is administered by the Employment StandardsAdministration (ESA) Division of Longshore and Harbor Workers Compensation program(DLHWC) whose mission is to effectively administer a program of compensation andmedical benefits to cover workers who are injured on the job or suffer from occupationaldisease. The DLHWC has direct responsibility for all aspects of the administration of theFund.

The Fund supports the program mission by providing compensation, and in certaincases, medical care payments to District of Columbia employees for work related injuriesor death. Effective July 26, 1982, the District of Columbia became responsible foradministration and operation of a separate special fund to cover post July 26, 1982,injury cases.

The DCCA provides medical benefits, compensation for lost-wages and rehabilitationservices for job-related injuries, diseases or death of certain private-sector workers in theDistrict of Columbia. Generally, benefits are paid directly from private funds by anauthorized self-insured employer or through an authorized insurance carrier. Casesmeeting the requirements of the Longshore and Harbor Workers Compensation statuteas extended to the District of Columbia Act of 1928 are paid from the Fund comprised

primarily of employer contributions (assessments) and administered by the DLHWC. Infiscal year 2006 and 2005, 621 and 638 injured workers and their dependants receivedcompensation benefits from the Fund.

Additionally, the District of Columbia Workmens Compensation Act incorporates Section10(h) of the LHWCA, which provides annual wage increase compensation (cost of livingadjustments). Fifty percent of this annual wage increase for pre-1972 compensationcases is paid by Federal appropriated funds, and fifty percent is paid by the Fund throughthe annual assessment. Appropriated funding for 10(h) is not reflected in the


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U.S. Department of LaborOffice of Inspector General 2

Report Number: 22-07-006-04-432

accompanying financial statements. Appropriated funding is reflected in the FederalEmployees Compensation Acts Special Benefits Fund.

Although the Fund is administered by the Secretary of Labor, the U.S. Treasury is theCustodian, holding the funds in trust. The Fund is not property of the United States, butcan only be disbursed as specified in Section 44(i) of the Longshore Act. Administrativeservices for operating the Fund are provided by the ESA through direct FederalAppropriations. Appropriated funding for administrative services is not reflected in theaccompanying financial statements.

Financial HighlightsThe majority of the revenue of the Fund is generated through annual recurringassessments paid by self-insured employers and insurance carriers and totaled$10,788,519 in fiscal year 2006. This compares with assessment revenue of$11,427,419 for fiscal year 2005. In addition, investment income for the Fund was$154,528 for fiscal year 2006 compared to $62,554 for fiscal year 2005. The averageinterest rate earned during fiscal year 2006 was 4.61% compared to 2.50% for fiscal year2005.

The Funds costs remained relatively stable compared to fiscal year 2005; $10,448,159for fiscal year 2006 compared to $10,574,792 for fiscal year 2005. Proceeds of the Fundare used for payments under: section 8(f) for second injury claims; section 10(h) for initialand subsequent annual adjustments in compensation for permanent total disability orrelated death from injuries which occurred prior to the effective date of the 1972 LHWCAamendments; and section 18(b) for compensation to injured workers in cases ofemployer default.

Performance Goals and ResultsDCCA supports the Department of Labors Strategic Goal 4 Strengthened EconomicProtections. This goal broadly promotes the economic security of workers and families. In

particular, the DCCA program supports Performance Goal 4B Reduce theConsequences of Work-Related Injuries. The Department of Labor plays a large role inensuring that worker benefits are protected and that employers administer benefitprograms in an appropriate way. The DCCA program assists in meeting this outcomegoal by establishing the long term performance goal of ensuring sufficient funds areassessed to fund the annual payments, and by prompt payment to the beneficiaries.These targets were achieved. The assessments were sufficient to cover the costs, andno beneficiaries suffered a delayed payment.


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3 U.S. Department of LaborOffice of Inspector General

Report Number: 22-07-006-04-432

Internal Controls and Systems

The Longshore and Harbor Workers Compensation Divisions Branch of FinancialManagement and Insurance is a very small unit comprised of four employees and onesupervisor, all working in very close proximity to each other. Much of the oversight,evaluation, monitoring, and control and almost all of the supervisory activity is informal,done on a face-to-face basis. Similarly, each of the district offices is in itself a small unit,operating in the same fashion as the Branch of Financial Management and Insurance.

Cases paid by the Special Fund are paid as a result of a formal Compensation Orderissued by a District Director or Administrative Law Judge, setting forth precisely whatpayment is due and to whom the payment is due. Each new case coming in for SpecialFund payment is prepared and reviewed by a total of five different employees beforepayment is made, thus ensuring accuracy.

Monthly cash statements, monthly case management reports, quarterly reviewprocesses, biweekly payment summaries, the SF-224 report and statement ofdifferences all provide current, reliable, and accurate information.

Management communicates all procedural, policy, and operating goals to staff by meansof weekly staff meetings, a written procedure manual, frequent e-mail communication,and frequent individual communications regarding changes, problems and issues.

Known Risks and Uncertainties

The DCCA Fund is assessed one year at a time for current expenses; there is no reservefor future Fund obligations. In keeping with the requirement of section 44 of theLongshore Act, obligations are paid as they are incurred. Assessments are based oncompensation and medical benefits paid in the prior calendar year. The District ofColumbia Workmens Compensation Act of 1928 has been repealed and the DC Special

Fund only assesses based on payments in cases that arose prior to July 26, 1982, theannual Special Fund assessment is assessed against a shrinking base of industrypayments. These payments are concentrated among a relatively few insurance carriersand self insured employers. For example, the largest nine insurance carriers and self-insured employers alone fund over 63% of the District of Columbia assessments. If oneor more of the largest payers became insolvent and was unable to pay their assessmentobligations, temporary collection issues would result, necessitating special, unscheduledassessments or other actions to keep the Special Fund funded for current liabilities.


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U.S. Department of LaborOffice of Inspector General 4

Report Number: 22-07-006-04-432

One insurance company group is currently insolvent and is being operated by the Stateof Illinois Insurance Department. The group is responsible for nearly 20% of the totalDistrict of Columbia assessments. If these carriers go into liquidation and stop payingtheir assessments, this would precipitate a collection crisis for the District of Columbiaassessment.

Limitations of the Financial Statements

The following limitations are part of the financial statements: The financial statements have been prepared to report the financial position and

results of operations of the entity, pursuant to the requirements of the Chief FinancialOfficers Act of 1990, U.S.C. 3515 (b).

While the statements have been prepared from the books and records of the Fund inaccordance with the formats prescribed by OMB, the statements are different from thefinancial reports used to monitor and control budgetary resources which are preparedfrom the same books and records.

The statements should be read with the realization that they are for a component ofthe U.S. Government, a sovereign entity, that liabilities cannot be liquidated withoutthe enactment of an appropriation, and that the payment of all liabilities other than forcontracts can be abrogated by the sovereign entity.


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KPMG LLP2001 M Street, NWWashington, DC 20036


5 U.S. Department of LaborOffice of Inspector GeneralReport Number: 22-07-006-04-432

KPMG LLP, a U.S. limited liability partnership, is the U.S.member firm of KPMG International, a Swiss cooperative.

Independent Auditors Report

Ms. Victoria Lipnic, Assistant SecretaryEmployment Standards AdministrationU.S. Department of Labor

We have audited the accompanying balance sheet of the U.S. Department ofLabors (DOL) District of Columbia Workmens Compensation Act Special Fund(the Fund), as of September 30, 2006, and the related statements of net cost,changes in net position, financing, and budgetary resources (hereinafter referred

to as financial statements) for the year then ended. The objective of our auditwas to express an opinion on the fair presentation of these financial statements.In connection with our fiscal year 2006 audit, we also considered the Fundsinternal controls over financial reporting and performance measures, and testedthe Funds compliance with certain provisions of applicable laws and regulationsthat could have a direct and material effect on these financial statements. Theaccompanying financial statements of the Fund as of and for the year endedSeptember 30, 2005, were audited by other auditors whose report thereon, datedJuly 10, 2006, expressed an unqualified opinion on those consolidated financialstatements.

SUMMARY

As stated in our opinion on the financial statements, we concluded that theFunds financial statements as of and for the year ended September 30, 2006,are presented fairly, in all material respects, in conformity with U.S. generallyaccepted accounting principles.

Our consideration of internal controls over financial reporting and performancemeasures would not necessarily disclose all matters in the internal control thatmight be material weaknesses as defined in the Internal Control Over FinancialReporting and Internal Controls Over Performance Measures sections of this

report. However, we noted no matters involving the internal control and itsoperation that we considered to be material weaknesses as defined in this report.

The results of our tests of compliance with certain provisions of laws andregulations disclosed no instances of noncompliance or other matters that arerequired to be reported herein under Government Auditing Standards, issued bythe Comptroller General of the United States, and Office of Management and


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error or fraud in amounts that would be material in relation to the financialstatements being audited may occur and not be detected within a timely periodby employees in the normal course of performing their assigned functions.

Because of inherent limitations in internal controls, misstatements due to error orfraud may nevertheless occur and not be detected. However, we noted nomatters involving the internal controls over financial reporting and its operationthat we considered to be material weaknesses as defined above.

INTERNAL CONTROLS OVER PERFORMANCE MEASURES

Under OMB Bulletin No. 06-03, the definition of material weaknesses is extendedto other controls as follows. Material weaknesses are reportable conditions inwhich the design or operation of one or more of the internal control components

does not reduce to a relatively low level the risk that misstatements caused byerror or fraud, in amounts that would be material to a performance measure oraggregation of related performance measures, may occur and not be detectedwithin a timely period by employees in the normal course of performing theirassigned functions. Because of inherent limitations in internal control,misstatements due to error or fraud may nevertheless occur and not be detected.

In our fiscal year 2006 audit, we noted no matters involving the design andoperation of the internal control over the existence and completeness assertionsrelated to key performance measures that we considered to be materialweaknesses as defined above.

COMPLIANCE AND OTHER MATTERS

The results of our tests of compliance described in the Responsibilities section ofthis report disclosed no instances of noncompliance or other matters that arerequired to be reported herein under Government Auditing Standardsand OMBBulletin No. 06-03.

* * * * *

RESPONSIBILITIES

Managements Responsibilities. Management is responsible for the financialstatements, including:

Preparing the financial statements in conformity with U.S. generally acceptedaccounting principles;


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necessary to achieve the objectives described in Government Auditing Standardsand OMB Bulletin No. 06-03. We did not test all internal controls relevant to

operating objectives as broadly defined by the Federal Managers FinancialIntegrity Act of 1982. The objective of our audit was not to provide an opinion on

the Funds internal control over financial reporting. Consequently, we do notprovide an opinion thereon.

As further required by OMB Bulletin No. 06-03, in our fiscal year 2006 audit, withrespect to internal control related to performance measures determined bymanagement to be key and reported in the Management Discussion andAnalysis section, we obtained an understanding of the design of internal controlsrelating to the existence and completeness assertions and determined whether

these internal controls had been placed in operation. We limited our testing tothose controls necessary to test and report on the internal control over keyperformance measures in accordance with OMB Bulletin

No. 06-03. However, our procedures were not designed to provide an opinion oninternal control over reported performance measures and, accordingly, we do notprovide an opinion thereon.

As part of obtaining reasonable assurance about whether the Funds fiscal year2006 financial statements are free of material misstatement, we performed testsof the Funds compliance with certain provisions of laws and regulations,

noncompliance with which could have a direct and material effect on thedetermination of the financial statement amounts. We limited our tests ofcompliance to the provisions described in the preceding sentence, and we didnot test compliance with all laws and regulations applicable to the Fund.However, providing an opinion on compliance with laws and regulations was notan objective of our audit and, accordingly, we do not express such an opinion.

RESTRICTED USE

This report is intended solely for the information and use of the United StatesDepartment of Labors management, Office of Inspector General, OMB, the U.S.

Government Accountability Office, and the U.S. Congress, and is not intended tobe and should not be used by anyone other than these specified parties.

March 30, 2007


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U.S. Department of LaborOffice of Inspector General 10Report Number: 22-07-006-04-432

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DISTRICT OF COLUMBIA WORKMEN'SCOMPENSATION ACT SPECIAL FUND

Balance Sheets


Assets 2006 2005Intra-governmental assets:

Funds with U.S. Treasury (Note 2) $ 75,967 2,066,020Investments (Note 3) 5,611,000 3,000,000Accounts receivable (Note 4) 784

Total intra-governmental assets 5,687,751 5,066,020

Accounts receivable, net of allowance (Note 4) 411,594 384,027Total assets $ 6,099,345 5,450,047

Liabilities and Net Position

Liabilities:Accrued benefits payable $ 282,571 251,997Deferred revenue 2,633,150 2,783,452Other liabilities (note 5) 746,086 471,948

Total liabilities 3,661,807 3,507,397

Net position:Cumulative results of operations 2,437,538 1,942,650

Total liabilities and net position $ 6,099,345 5,450,047

See accompanying notes to financial statements.


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Statements of Net Cost

Years ended September 30, 2006 and 2005

2006 2005

Special fund net cost of operations:Second injury compensation, Section 8(f) $ 9,620,081 9,787,312Wage increase compensation, Section 10(h) 588,473 598,929Compensation payment for self-insurer in default,

Section 18(b) 239,605 188,551

Net cost of operations $ 10,448,159 10,574,792



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Statements of Changes in Net Position


2006 2005

Cumulative results of operations, beginning $ 1,942,650 1,027,469Budgetary financing sources:

Non-exchange revenues:Investment interest 154,528 62,554Assessments 10,788,519 11,427,419

Total non-exchange revenues 10,943,047 11,489,973Net cost of operations (10,448,159) (10,574,792)

Net position, end of period $ 2,437,538 1,942,650


Net position, end of period $ 4,380,188 2,970,119



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Statements of Budgetary Resources


2006 2005

Budgetary resources:Unobligated balance, brought forward $ 4,815,948 4,719,538Budget authority

Appropriations received (assessments) 10,867,049 10,674,005

Total budgetary resources $ 15,682,997 15,393,543

Status of budgetary resources:Obligations incurred (Note 6)

Direct $ 10,153,891 10,577,595Unobligated balances - available:

Other available - exempt from apportionment 5,529,106 4,815,948

Total status of budgetary resources $ 15,682,997 15,393,543

Change in obligated balance:Obligated balance , net

Unpaid obligations, brought forward, October 1 $ 251,997 282,550Obliations incurred, net 10,153,891 10,577,595Less: Gross Outlays (10,246,101) (10,608,148)Obligated balance, net, end of period

Unpaid obligations $ 159,787 251,997

Outlays:Gross Outlays $ 10,246,101 10,608,148

Net outlays $ 10,246,101 10,608,148



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Statements of Financing


2006 2005

Obligations incurred $ 10,153,891 10,577,595

Total resources used to finance activities 10,153,891 10,577,595

Resources used to finance items not part of thenet cost of operationsResources that finance the acquisition of assets (10,522)

Total resources used to finance itemsnot part of the net cost of operations (10,522)

Total Resources used to finance thenet cost of operations 10,143,369 10,577,595

Components not requiring or generating resources:Revaluation of assets and liabilities 5,284 (6,469)Other 299,506 3,666

Total components of net cost of operationsthat will not require or generate resources 304,790 (2,803)

in the current period

Net cost of operations $ 10,448,159 10,574,792



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Notes to the Financial Statements



(1) Summary of Significant Accounting Policies

The principal accounting policies which have been followed by the Fund in preparing theaccompanying financial statements are set forth below.

(a) Reporting Entity

These financial statements present the financial position, net cost of operations,changes in net position, budgetary resources and financing activities of the District

of Columbia Workmens Compensation Act Special Fund (Fund). The Fund isadministered by the Employment Standards Administration (ESA) which is anagency within the United States Department of Labor. Within ESA, the Division ofLongshore and Harbor Workers Compensation has direct responsibility foradministration of the Fund. The Fund offers compensation, and in certain cases,medical care payments to District of Columbia employees for work related injuriesor death. Effective July 26, 1982, the District of Columbia Workmens CompensationAct was amended whereby the Mayor of the District of Columbia becameresponsible for administration and operation of a separate special fund to cover postJuly 26, 1982, injury cases.

Additionally, the District of Columbia Workmens Compensation Act Section 10(h)provides annual wage increase compensation (cost of living adjustments). Fiftypercent of this annual wage increase for pre-1972 compensation cases is paid byFederal appropriated funds and fifty percent is paid by the Fund through the annualassessment. Appropriated funding for 10(h) is not reflected in the accompanyingfinancial statements. Appropriated funding is reflected in the Federal EmployeesCompensation Acts Special Benefit Fund. Also, these financial statements do notinclude the Special Fund administered by the Mayor of the District of Columbia forinjury cases occurring after July 26, 1982.

(b) Basis of Accounting and Presentation

These financial statements present the financial position, net cost of operations,changes in net position, budgetary resources and financing activities of the Fund, inaccordance with U.S. generally accepted accounting principles and the form andcontent requirements of OMB Circular A-136. These financial statements have beenprepared from the books and records of the Fund. These financial statements arenot intended to present, and do not present, the full cost of the District of ColumbiaWorkmens Compensation (DCCA) program administered under the Longshore andHarbor Workers Compensation Act Program (Longshore Program). In addition tothe Fund costs presented in these statements, the full cost of the DCCA portion of


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(f) Accrued Benefits Payable

The District of Columbia Workmens Compensation Special Fund providescompensation and medical benefits for pre-July 26, 1982, work related injuries toemployees of the District of Columbia. The Fund recognizes a liability for disabilitybenefits payable to the extent of unpaid benefits applicable to the current period.

(g) Assessment Overpayment by Carriers

Assessment overpayments are current liabilities and are to be refunded uponinsurance carrier or self-insured employers request or applied to reduce futureassessments.

(h) Deferred Revenue

Deferred revenues represent the unearned assessment revenues as ofSeptember 30, the Funds accounting year end. The annual assessments cover acalendar year and, accordingly, the portion extending beyond September 30 hasbeen deferred.

(i) Financing Sources Other Than Exchange Revenue

Non-exchange revenues arise from the Federal governments power to demandpayments from and receive donations from the public. Non-exchange revenues arerecognized by the Fund for assessments levied against the public and interestincome from investments.

The Funds primary source of revenue is annual assessments levied on insurancecarriers and self-insured employers. The Fund also receives interest on Fundinvestments and on Federal funds in the possession of non-Federal entities.

(2) Funds with U.S. Treasury

Funds with U.S. Treasury at September 30, 2006 and 2005 consisted of cash deposits of$75,967 and $2,066,020 respectively. There was $47 in cash deposits at September 30,2006 and $408 in cash deposits at September 30, 2005 being held as security byauthority of Section 32 of the Longshore and Harbor Workers Compensation Act in theFunds with U.S. Treasury balance. Section 32 funds relate to the default of self-insuredemployers and are available for payment of compensation and medical benefits tocovered employees of the defaulted companies.


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Funds with U.S. Treasury at September 30, 2006 consisted of the following:

Entity AssetsUnobligated Unobligated Obligated

Balance Balance Balance Not Total Non-entityAvailable Unavailable Yet Disbursed Entity Assets Assets Total

Special Fund $ 75,967 75,967 75,967

Funds with U.S. Treasury at September 30, 2005 consisted of the following:Entity Assets

Unobligated Unobligated ObligatedBalance Balance Balance Not Total Non-entityAvailable Unavailable Yet Disbursed Entity Assets Assets Total

Special Fund $ 2,066,020 2,066,020 2,066,020

(3) Investments

Investments at September 30, 2006 and 2005 consisted of the following:

September 30, 2006

Face Net MarketValue Discount Value Value

Intragovernmental securities:Marketable 5,611,000 5,611,000 5,611,000

September 30, 2005Face Net MarketValue Discount Value Value

Intragovernmental securities:Marketable $ 3,000,000 3,000,000 3,000,000

Investments of $54,100 and $51,300 at September 30, 2006 and 2005, respectively arebeing held as security by authority of Section 32 of the Longshore and Harbor WorkersCompensation. Section 32 investments relate to the default of self-insured employersand are restricted. These investments are available for payment of compensation andmedical benefits to covered employees of the defaulted companies. Investments atSeptember 30, 2006 and 2005 consist of overnight securities and short-term U.S.Treasury Bills stated at amortized cost, which approximates market. Investments atSeptember 30, 2006, bear an interest rate of 5.03 % compared to rates varying from


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1.32% to 3.67% for 2005. Interest rates on securities bought and sold during fiscal year2006 ranged from 3.46% to 5.30% compared to 1.32% to 3.67% for fiscal year 2005.

(4) Accounts Receivable, Net

Accounts receivable at September 30, 2006 and 2005 consisted of the following:

2006 2005

Entity assets:Intragovernmental:nterest ece va e 784

Total Intragovernmental accounts receivable $ 784

Benefit overpayments $ 56,433 15,584Assessments receivable 492,358 496,452Less: allowance for doubtful accounts (137,197) (128,009)

Total accounts receivable from the public, net $ 411,594 384,027

Assessments receivable represent the unpaid annual assessments from the current andprior years. Accounts receivable from overpayments to claimants arise primarily from

amended compensation orders and corrections of payment computations. Thesereceivables are being primarily recovered by partial and total withholding of benefitpayments.

Changes in the allowance for doubtful accounts during fiscal year 2006 and fiscal year2005 consisted of the following:

2006Allowance Write Revenue Allowance

October 1, 2005 Offs Adjustment Bad Debt September 30, 20

Entity assets:Benefit overpayments $ (3,896) (10,212) (14,1Assessment receivable (124,113) 1,024 (123,0

$ (128,009) (9,188) (137,1


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2005Allowance Write Revenue Allowance

October 1, 2004 Offs Adjustment Bad Debt September 30, 20

Entity assets:Benefit overpayments $ (4,812) 916 (3,89Assessment receivable (95,811) (21,255) (7,047) (124,11

$ (100,623) (21,255) (6,131) (128,00

(5) Other Liabilities

Other liabilities at September 30, 2006 and 2005 consisted of the following currentliabilities:

2006 2005

Other liabilities:Assessment overpayments by carriers $ 691,939 420,240Defaulted employer liability:

Held in investments 54,100 51,300Held in cash 47 408

54,147 51,708

Total other liabilities $ 746,086 471,948

Assessment overpayments are to be refunded upon request or applied to reduce futureassessments.

Defaulted employer liability relates to the funds and investments held by the District ofColumbia Special Fund which are being held as security by authority of Section 32 of theAct. These funds and investments are available for compensation and medical benefitsto covered employees of the defaulted companies. Management estimates that thesefunds and investments held will be sufficient to cover the future benefits associated with

the covered employees.


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(6) Statement of Budgetary Resources

(a) Apportionment Categories of Obligations Incurred

Obligations incurred reported on the Statement of Budgetary Resources in FY 2006and FY 2005 consisted of the following:

2006 2005

Direct Obligations:Exempt from apportionment $ 10,153,891 10,577,595

(b) Explanation of Differences Between the Statement of Budgetary Resourcesand the Budget of the United States Government

A reconciliation of budgetary resources, obligations incurred and outlays, aspresented in the Statement of Budgetary Resources to amounts included in theBudget of the United States Government for the year ended September 30, 2005 isshown below:

2005

Budgetary Obligations(Dollars in Millions) Resources Incurred Outlays

Statement of Budgetary Resources $ 15 11 11

Longshore and Harbor Workers Compensati 203 133 132

Budget of the United States Government $ 218 144 143

Documents

Department of Labor: 22-07-006-04-432